Critics say there aren't enough dual-mode handsets, but in 2008, we'll see that excuse buried under a pile of new devices. We'll also see, I believe, a major cable TV company broadly launch an FMC service ahead of any wireline telco competitors. As for the major telcos, I don't think the competitive pressure is strong enough--or the technology choices clear enough--for them to act on a broad scale yet.
Also, I think 2008 will be the Year of the Femtocell, as carrier evaluations [2] come to a head and overall costs come down.
Prediction #2: Telco immunity compromise will be reached
Something has to happen by Feb. 1, when current surveillance
legislation expires. Before the holiday break, Sen. Harry Reid
(D.-Nev.) withdrew new legislation [3] that
included telco immunity, citing the heated atmosphere and likely lack
of support. Are immunity opponents more malleable to telco immunity
after some holiday sweets and presents from Santa? Not likely.
President Bush insists he will veto any legislation without telco
immunity, but the administration also wants something passed ASAP in
the name of national security.
A firm decision one way or the other seems unlikely. There may be no other way for this controversy to end than with some kind of compromise that allows new legislation to proceed and the telco immunity clause to be configured in such a way that the telcos are immunized from financial damages based on past surveillance actions. Some legislators have pointed out that one way to accomplish this would be to have the federal government stand in as the defendant in all pending surveillance lawsuits. I'm betting that will be the core of any compromise.
Prediction #3: Carrier Ethernet boom will continue
Carrier Ethernet is already booming, but in 2008, the growth in
services and the further penetration of Ethernet into public networks
will continue unabated, and possibly stronger than ever. But you
already knew this, right?
The big news in 2008 regarding carrier Ethernet will revolve around new technology flavors. Some carriers already have committed to provider backbone transport, and in the coming year, we'll see many more evaluate PBT and alternative transport-multiprotocol label switching. I do believe the three largest U.S. telcos will commit to PBT or T-MPLS deployments during 2008. And with carrier Ethernet becoming broadly available, bandwidth management and quality will be the key technology themes driving new product launches.
Prediction #4: Private equity telecom deals will increase
I will admit to being out of my realm in discussing the whims of
private equity firms, but according to recent analysis by Ovum and
others, many private equity firms have funds to spend, and they want to
spend it in the telecom industry. We've seen some high-profile private
equity moves in telecom in the recent past, including the buyouts of Covad Communications [4] and Bell Canada [5].
In 2008, there will be more to come. With the economy teetering, P.E. firms will look to telecom carriers and vendors who have high cash flow and manageable debt as new investment opportunities. Look for at least one well-known vendor and one international carrier to be taken over in a P.E.-driven deal this year. In addition, look for two or three more high-ranking telecom execs to join private equity firms [6].
Prediction #5: 700 Mhz won't change industry landscape
The 700 Mhz spectrum auction is scheduled to kick off later this
month, and while Google has applied to bid, I don't think the end
result of this auction will much alter the industry landscape. Big
telcos and cable TV companies will get their spectrum, and use it to
drive some interesting services (most notably the cable guys) [7],
but I think Google's participation will prove anti-climactic. I don't
think Google wants to operate a network, and if it actually does
acquire spectrum, I think a spin-off or or joint venture with some
other network firm is more likely. Spectrum auctions are big events
intended to open doors for new players, but they rarely turn out that
way.
While the auction won't change the industry too much, the open access issue it has been coupled with could continue to change the game. Stay tuned for more announcements from wireless carriers proclaiming open access strategies.